Executive pay: Neither fair nor rigged

Posted by Learningly Staff on July 09, 2016

Bosses’ pay in the rich world is not a fix. But it is flawed

IN SEPTEMBER 2012 Marissa Mayer, newly installed as the CEO of Yahoo, an internet firm, and positively glowing with star power, met members of the company’s compensation committee. She told the committee that she was in discussions with a potential candidate to be her right-hand man, and wanted to get guidance on “compensation parameters”.

Ms Mayer described the candidate’s expected compensation package as “$15m per year (with $40 million as part of that up front in a four-year grant) and a $16m or more make-whole payment.” Ms Mayer was authorised to continue negotiations in that meeting, and in one that followed. Just one tiny detail was missing: no one apart from Ms Mayer actually knew who the candidate was.